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3 Δεκ 2012 (πριν από 4 χρόνια και 11 μήνες)

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Policy Approaches to Pharmaceutical Pricing and
Reimbursement in European C
ountries

Panos Kanavos, PhD

L
ecturer in I
n
ternational Health P
olicy

and
R
esearch Fellow in P
harm
aceutical
E
conomics

London School of Economics

and Political Science



LSE Health

UNI
TED KINGDOM


This brief addresses
three specific questions: 1)

what factors are considered in assessing
the value of new
pharmaceutical products
in a number of
European
countries

from a
supply
-

and
a demand
-
side perspective
? 2)
how is value assessment link
ed with pricing
,

reimbursement
and prescribing
de
cisions in the same countries? and, 3)

what challenges
are there in the approaches followed and what are the lessons
from Europe
for

the United
States
? In addressing these questions, evidence was drawn from
the seven
European
Union (EU)
countries
, namely, the

United Kingdom, Germany, France, Italy,
Spain,
S
weden

and the Netherlands
.
The selection of these countries underlines the variety of
regulatory regimes and the multiplicity of policies pursued.


Supply
-

and D
emand
-
side Pricing and Reimbursement R
egulation


European countries apply both supply
-

and demand
-
side measures to control expenditure
on pharmaceuticals

(Table 1)
.
Supply
-
side controls aim at limiting the cost of reimbursed
medicines to
health insur
ance
, by controlling their price and by limiting their availability
through the use of positive and negative lists

(formularies)
.
Several
measures apply on
the supply
-
side. In principle, these are linked to
price

or
profit

regulation and the
establishment
of regulatory systems that control prices of pharmaceuticals or the profits
that manufacturers make on their sales to statutory health insurance. Price control is
achieved through

a variety of methods
, including explicit consideration of companies’
cost st
ructures

(cost
-
plus method, as it is performed in Spain)
,
p
rice comparisons with
other countries

(France, Spain, Italy)
, reference pricing

(Germany, the Netherlands,
France, Spain, Italy)
, price
-
volume agreements

(France, Spain)
, and/or average pricing

(t
h
e Netherlands)
.
Profit control, through rate of return re
gulation, applies only in the
United Kingdom
.
In addition to the above methods, several other measures aimed at
controlling pharmaceutical prices and their growth, have been put in place by national
regulators, including limits on price revisions, price cuts

(the United Kingdom
,
Germany
)
, price freezes, linking increases in the pharmaceutical budget to the real overall
rate of economic growth

(Spain)
, establishing fixed budgets for expensive products,

and
establishing me
-
too pricing
, among others
.


A
ll countries
examined
use a variety of criteria to negotiate admission to reimbursement
funds and inclusion into formularies or positive lists

(Table 2)
. The therapeutic benefits
of a product vis
-
à
-
vis thos
e of its competitors are frequently cited. In principle, if a
product is unquestionably superior in therapeutic terms, it will be reimbursed irrespective
of the outcome of a health economic evaluation, although in practice, budgetary
Panos Kanavos, PhD



2

constraints mean that
negotiation needs to take place to determine the price which health
insurance is willing (or can afford) to pay

(with the exception of t
he United Kingdom

and
Germany, where all medicines are potentially reimbursable, pending a health economic
assessment an
d subject to being prescribed respectively)
. Conversely, if it is of only
marginal therapeutic benefit, it will be difficult to justify a price premium relative to its
competitors, and a health economic evaluation is unlikely to be of
any
help.


Several co
untries actively use health economic evaluations in the decision
-
making
process, either as an additional tool to determine the reimbursement price (the
Netherlands, Sweden, Italy), or even as a mechanism to guide prescribers (
for instance
the National Inst
itute for Health and Clinical Excellence [
NICE
]

in the United Kingdom).
In the United Kingdom
, NICE guidance has become binding. More countries are joining
this league and have set up working parties to draft pharmaco
-
economic guidelines to be
used in the
decision
-
making process or, indeed, have drafted these guidelines. France in
principle requires some form of economic evidence, although it is still unclear the extent
to which this is happening routinely and for all new products.
In Germany and
Spain
heal
th economic evaluations
are conducted
at the health system level, although these are
still not linked to the award of a reimbursed price.

Recent developments in Spain suggest
that health economics may be used in future to determine product reimbursement,
w
hereas Germany is currently focusing on product quality assessment through the
establishment of a separate agency (IQWiG) that assesses effectiveness.


Health economic evaluations, however, are not likely to persuade doctors to prescribe one
medicine in fa
vour of another where clinical arguments have failed, and there are usually
no financial implications for the doctor or the patient. If there are financial implications,
this will help sway the prescriber who must, in turn, persuade the patient that the
ad
ditional therapeutic benefits or improvement in the quality of life offered by the drug in
question are worth the price premium.
For this purpose, policies have been developed
targeting the proxy demand
-
side (i.e. prescribing and dispensing) and the demand
-
side
(patients). The countries examined in this brief follow proxy demand
-
side and demand
-
side policies with variable degrees of intensity and, consequently, with variable
degree
of
effectiveness.


On the proxy demand
-
side, these policies are primarily as
sociated with the existence or
not of fixed budgets and other financial or non
-
financial incentives to prescribers, the
existence of and adherence to guidelines, and the existence of a strong generic policy
both at prescribing (e.g. mandatory INN prescribi
ng) and at dispensing level (
e.g.

through
generic substitution), among others (Table 3). The evidence suggests that

variable
success of these policies in achieving efficiency in resource allocation and savings in
health budgets, as well as an increased emp
hasis in their implementation.


Demand
-
side policies with emphasis on patient cost
-
sharing, have been weak in
influencing patient demand, due to (a) very low co
-
pays which are also frequently not
associated with the cost of prescriptions and (b) the signi
ficant exemptions prevailing in
the countries described in this brief, which means that only a moderate number of
prescriptions actually carry the statutory health insurance co
-
pays. Indicatively, between
Panos Kanavos, PhD



3

80% and 85% of the total n
umber of prescriptions in

the United Kingdom

and France are
co
-
payment free. In France, the additional private insurance that individuals purchase can
cover these co
-
pays, further reducing their impact on individual demand.



Factors Considered in Assessing the Value of New D
rugs

Assessing the value of (new) drugs is a complex function that includes several parameters
and is intertwined with national objectives in pharmaceutical policy. Indeed, the evidence
suggests that “value” is a very subjective concept and this is demonstrated

by the
multiplicity of factors considered in determining the price that statutory health insurance
will pay. Determining value on a cost
-
effectiveness basis also implies adapting the
product price to the cost structure in each of the countries considered.

The cost structure
is, in turn, influenced by what health insurance deems appropriate to pay; for instance, as
health insurance organisations believe they should only be paying for direct health costs,
indirect or societal costs are not usually included i
n health economic assessments.
Consequently
, this has a downward effect on product price and, some would argue, it
possibly

under
-
estimates product value.


The evidence also suggests that

the emphasis on what factors determine reimbursement is
purely a mat
ter of national policy; clearly, a product’s clinical assessment on the basis of
(comparative)
efficacy is the most important criterion in all countries. Assessing the
economic value of (new) product
s

is a relatively recent phenomenon, although its uptake
has so far been fast. Ultimately, new products are evaluated on the basis of the
cumulative evidence produced.


The determination of value is very frequently affected by the
ex post
implementation of
frequent ad hoc measures, such as price cuts, or payback

clauses. Finally, while in several
policy settings there is explicit acknowledgement of the value of new pro
ducts, other
factors take prece
dence, e.g. price/volume tradeoffs and budget impact analysis.


Linking Value Assessment with Pricing and Reimbursem
ent D
ecisions

T
he assessment of clinical cost effectiveness is directly related to the decision to
reimburse or not a new product.

In the Netherlands, Sweden
a
nd Italy, clinical and
economic assessments are formal requirements for determining reimbursement

levels,
particularly when applicants request a price premium over existing therapies. In France,
clinical assessment has precedence over economic assessment, although the latter is
include
d

in th
e negotiation dossier. In the United
Kingdom
, all new treatm
ents are
available and potentially reimbursable, subject to guidance

by the National Institute for
Health and Clinical Excellence (NICE)
. If a new product receives negative NICE
guidance, then the U
.
K
.

N
ational
H
ealth
S
ervice (NHS)

will not pay for the pro
duct
although the manufacturer will be encouraged to submit new evidence that may support
its case.
Still, a few years after the introduction of NICE very few treatments have
altogether received negative guidance, but most treatments are considered to be s
econd,
third or subsequent line treatments and therefore apply to smaller numbers of patients
than their manufacturers originally envisaged.
Germany
has introduced clinical
effectiveness assessment recently through the newly established Quality of Care Ins
titute
Panos Kanavos, PhD



4

(IQWiG)
in an attempt to rationalise pricing and pharmaceutical expenditure
, but

what is
admissible to the institute as
appropriate evidence on effectiveness is subject to political
interpretation
.

The use of economic evidence in Germany is currentl
y not linked
explicitly or implicitly to the decision
-
making process, but may do so in the future.


Importantly, although all the above countries have developed guidelines for the conduct
of economic evaluations and guidance to applicants, thus streamlinin
g the production of
evidence
in a format desirable by policy
makers, few countries have developed criteria
that would classify new products as more or less innovative than existing ones.
Understandably, this can be achieved through assessing the comparative

efficacy of new
products over others, but France and, to a lesser degree, the Netherlands, have developed
methodologies that would classify new products as major, minor or me
-
too innovations.
In the French case, this has, in turn, direct implications for
the pricing (reimbursement
levels) of new products. Highly innovative products can be priced freely, whereas minor
innovations still go through the negotiation process, where all criteria are weighed
carefully.


It has also been made cl
ear that although cl
inical cost
-
effectiveness
lies

at the heart of
decision
-
making in the Netherlands, Sweden, Italy,
and
the United Kingdom
, and, to a
lesser
extent, France,
it is not the only criterion

on which negotiations are concluded.
Other criteria comprise budgetary i
mplications, number of indications, price/volume
tradeoffs, prices in other “comparable” countries, as well as a series of ad hoc measures,
such as price cuts or price freezes, which serve short
-
term fiscal objectives.


Challenges in the Approaches Followe
d and L
essons for the United States

Before considering the challenges in the approaches followed and the implications for

the
United States
, it is important to acknowledge that regulation, including regulation of
pharmaceuticals, typically operates within
national ramifications, applies to a particular
country or entity because

it

suits th
e
i
r respective

interests, and meets
their
constraints
.

The
seven
countries reviewed present a number of challenges and lessons for the
United
States
:



1.

How is
value

of ne
w products
defined?

V
alue is defined both in clinical terms (in all
seven

countries), but also in clinical and
economic terms (in a sub
-
section thereof, including France). Value also applies to the
benefit accruing from (innovative) me
-
too products as well

as the benefit accruing from
breakthrough new molecules, or new classes or molecules. Whilst there is universal
applicability of the clinical criterion, there is also rising influence of the comparative
economic (cost
-
effectiveness/cost
-
utility) criterion
, whether explicitly, or implicitly. The
latter does not overrule the former, but the two are seen in conjunction. The economic
criterion is viewed upon as a tool not to determine value, but to assess its extent over
existing therapies.


Panos Kanavos, PhD



5

2.

Is value defined f
or all products?

In assessing whether there is clinical efficacy, value judgements apply across
all

products
in countries where limited (positive) lists exist for the purpose (excluding
the
United
Kingdom
); typically, proof of clinical value and “positive”

therapeutic benefit are a
requirement for listing in the positive list

(or, equally, a requirement for not excluding
products from reimbursement)
; also typically, it is not uncommon for me
-
too products to
be reimbursed at a lower rate compared with their
earlier competitors. Cost
-
effectiveness,
on the other hand, applies to new treatments, including new molecules o
r new classes of
medications (United Kingdom
) and, typically, to those requesting a price premium over
existing therapies (explicitly in the Net
herlands, Sweden,

and Italy,

but implicitly in
France). It is also important to highlight that the use of economic criteria in decision
-
making is a necessary but not a sufficient condition for reimbursement, as other factors
are at play.


3.

Is the pricing pr
ocess kept separate from

reimbursement?

In most countries, there is a separation of pricing from reimbursement. Manufacturers are
free to either launch their products

without (price) constraints (United Kingdom
,
Germany, Sweden), or may be subject to price

regulation (Italy), which does not take into
account the (medical or economic) value of the product concerned. The issue of “Value”
is typically considered at the reimbursement level and assists in determining either (a)
whether a product is reimbursable
(i.e. include in or exclude from positive list or
prescribing), or/and (b) the reimbursement price (premium pricing or not). Cost
-
effectiveness, in particular, is not used to set the price of a treatment within a system,
rather, it is used to determine the

reimbursement rate of that treatment and whether it will
achieve a premium over others or not.


4.

What is the interplay between “value” and
cost containment?

In addition to
defining
“value”, common across all study countries and their
reimbursement agencie
s, is the pursuit of cost containment. To that end, reimbursement
agencies have an explicit remit, provided to them by government/parliament, to satisfy a
budget constraint. That does not necessarily mean that the (clinical and economic)
assessment of ther
apeutic benefit become secondary objectives, but it does mean that
there is a multiplicity of criteria used to “marry” therapeutic benefit with affordability
and meeting national budget constraints.

A
ll countries in question are using additional
policies i
n order to ensure value for money (price
-
volume tradeoffs, price cuts and price
freezes, budget
-
impact analysis, other criteria, including industrial policy considerations,
etc). To that end,
product
value is a key determinant of product reimbursement stat
us,
but
it is further influenced by overall cost and budgetary considerations (i.e. in addition to
clinical cost
-
effectiveness).





5.

How do US prices for innovative products compare with European prices for the
same products?


Panos Kanavos, PhD



6

It is very frequently alleged

that prices of innovative medicines are significantly higher in
the U
nited
S
tates

than they are in Europe. This is largely flawed and relates to ho
w list
prices are used in the United States

and in Europe. List prices in the U
nited
S
tates

are
“guide” pric
es and constitute the starting point for negotiations between manufacturers
and health insurance organisations. To that end, list prices are almost never reimbursed,
as they are discounted, but discounts are almost never available. In European countries,
l
ist prices are the outcome of reimbursement negotiations (where these take place) and,
consequently they are always reimbursed. A
s a result, the comparison of U.S.

list prices
with European list prices is by definition flawed.


A more sensible approach to

comparing U
.
S
.

and European prices would be to compare
reimbursed prices. From a U
.
S
.

perspective the Federal Supply Schedule (FSS) prices
could satisfy this criterion.
FSS prices are discounted prices based on discounts given by
manufacturers to (some of

their) preferred customers elsewhere in the system.
A
comparison of these prices with prices from the fiv
e largest European countries (the
United Kingdom
, Germany, France, Italy, and Spain) for the top 50 selling products on
both sides, suggests that diff
erences between the U
nited
S
tates

and Europe are small and
the argument that U
.
S
.

prices are significantly higher than European prices has no
foundation.


6.

Is i
ndustrial policy

actively pursued in European countries?

The pursuit of health policy objectives
coincides, in many instances, with the pursuit of
industrial policy

in the pharmaceutical sector
; the latter relates to the support of the
pharmaceutical industry in terms of providing explicit or implicit incentives to locate
within national boundaries

an
d

invest in innovation. Very often, it is very difficult to
disentangle the policy imperatives surrounding the assessment of clinical cost
-
effectiveness and the pursuit of industrial policy objectives.
In the U
nited
K
ingdom
,
industrial policy is explicitly

pursued through supply
-
side regulation by the
Pharmaceutical Pricing Regulation Scheme (PPRS), which combines free pricing subject
to profit control and R&D incentives. In Germany,

industrial policy is implicit through
free pricing of medicines and the im
plementation of targeted initiatives in certain areas
such as biotechnology by the relevant government agencies.
In France, industrial policy
considerations (such as employment, manufacturing value added, research, and exports)
are discussed during reimbur
sement negotiations and are, therefore, linked to
reimbursement decisions. In Spain, the government has an agreement with industry to
attract investment in certain priority research areas and contributes by channelling
funding

to these areas.


7.

Is health e
c
onomic
s used
explicitly or implicitly
?


Whereas economic assessment has become more prominent in recent years in informing
reimbursement decisions,
(potentially also
including Germany
and Spain
in the near
future
)
, economic

criteria are used differentl
y by

the study countries, reflecting national
sensitivities and/or priorities. One key distinction is the explic
it (
the
U
nited
Kingdom
, the
Netherlands, Italy, Sweden) versus the implicit (France
)

and informal

(Germany, Spain)
use
of economic criteria in deter
mining reimbursement status

of products that request a
price premium
.

Panos Kanavos, PhD



7


8.

What
criteria
are used
to determine reimbursement
?

Overall, multiple criteria are used to determine reimbursement of (new) treatments. These
include
primarily, the assessment of
medical
/therapeutic benefit;
the
severity of the
disease;
the
proposed price;
the
prices of other treatments similar to the one considered;
consideration of prices from other countries; explicit use of prices from other countries;
budget impact analysis; diagnosi
s
-
based reimbursement; economic criteria (cost
-
effectiveness/cost
-
utility); industrial policy;
expected sales
volume

of the assessed
product and price
-
volume tradeoffs
.


9.

Is the emphasis on the supply
-
side or the demand
-
side?

With the exception of the Unit
ed Kingdom

and Germany, other European countries used
to place heavier emphasis on the supply
-
side and policies affecting the pricing of
medicines. In recent years this has shifted towards placing greater emphasis on proxy
demand, parti
cularly policies on
physicians
and pharmacists. The former may be
incentivised to contribute towards cost containment and efficiency through budgets and
other financial and non
-
financial incentives, whereas for the latter, the method of
payment and the ability to perform (gen
eric) substitution features strongly. Generic
policies have attracted a
great deal of attention in all seven

countries, but it is
questionable that they have led to reduced prices in off
-
patent drugs in the majority of
them. Finally, patient co
-
pays are st
ill characterised by strong elements of
intergenerational solidarity in all countries.

Panos Kanavos, PhD



8

Table 1
:
Pharmaceutical P
ricin
g Criteria and Other Policies Used to Influence P
ricing in
7 EU

C
ountries
, 2006


UK

Germany

France

Italy

Sweden

Spain

The
Netherlands

Pri
cing

method

Free subject
to profit
control (rate
of return
regulation)

Free subject
to
Reference
Pricing

Free for
ASMR
1

1,2
products;
otherwise
negotiation

a. Average
pricing, b.
price control,
c. price
negotiation w.
CEA
2

Free subject to
requesting
reimbu
rsement;
proof of CEA
essential to
price premium

Price control
(paper
-
based
approach),
using cost
-
plus
and price
comparisons

a. Average
Pricing, b.
Reference
Pricing, c.
CEA for price
premium

Price
-
volume
considerations













Price freezes









(in the past)


Price cuts












Payback
clause












Explicit
criteria for
innovation

used to
determine
price










Implicit
criteria for
innovation













Notes:

1

ASMR: Amelioration du Service Medical Rendu or Assessment of the t
herapeutic benefit of a product.



2

CEA: cost effectiveness analysis.

Source:

The author.

Panos Kanavos, PhD



9

Table 2
:
Determining Pharmaceutical Reimbursement: Criteria and Other Policies U
sed in
7 EU

C
ountries
, 2006


UK

Germany

France

Italy

Sweden

Spain

The
Netherlands

C
EA explicit












Assessment of
clinical
effectiveness




(introduced in
2005)






Reference
pricing














CEA implicit




(through
DIMDI)








(already
performed but
not used
often)


Comparative
efficacy





(in + list)











Assessing
therape
utic
potential



(although
not at national
level)













Budget impact
analysis





(indirectly
and through
health
insurance
laws)











Industrial
policy









⡳(me)




(some)


Source:

The author.




Panos Kanavos, PhD



10

Table 3
:
Prescribing, Dispensing and C
on
sumption

of P
harmaceutic
als in 7 EU C
ountries, 2006

Country

Positive
list

Negative
list

Drug
Budget*

Guidelines and
Rx monitoring

Generic
prescribing

Generic
substitution

Incentives

Co
-
payment
s

France

Yes

No

Yes

Yes

Yes
(gatekeepers)

Yes

Yes
(gatekeepers)

% co
-
insurance

Germany

Yes

Yes

Target
indicative

Yes

Yes

Yes

Abolished

Flat fee per pack

Italy

Yes

No

Yes

Yes

Some, through
reference pricing

Yes

No

At national level: None
other than patients paying
excess over reference
price

At regional level
: some
dispensing fees and/or co
-
insurance

Spain

Yes

Yes

Yes

Yes, limited
impact

Yes

With doctor’s
agreement; also
part of reference
pricing

No

%
co
-
insurance
up to a
max
imum

per item

UK

No1

Yes

Yes*

Yes

Yes

No (at primary
care, but allowed
at inpatient
care)

Yes

Flat fee per
prescription
item

Sweden

Yes

No

Yes
(indirect)

Yes

Yes

Yes


Small deductible + co
-
insurance up to a limit

The
Netherlands

Yes

No

Yes

Yes

Yes

Yes

Yes, at
pharmacy
level

None, other than the
difference between
reference price and cos
t of
the drug of choice if latter
is greater than the former

Source
:
The author.

Note
:

*

Primary Care Groups (PCGs) are given a global budget to cater for the needs of their patients.

1

But Health Authorities and Primary Care Groups/Trusts (may) have th
eir own formulary. Where no data are given, this indicates that data are
not applicable or available.